Gas cap costing Oahu drivers

But neighbor isle drivers are saving a few cents per gallon, a state study shows

Oahu motorists are paying 5 cents a gallon more for regular gasoline because of the state's wholesale gas price cap, a study by the state Public Utilities Commission indicates.

But neighbor island consumers might be saving a few cents a gallon, the study suggests.

The study was prepared by the commission at the request of lawmakers, who are debating proposals on whether to amend or repeal the nation's only state price controls on gasoline. A copy of the 84-page report, released yesterday to Gov. Linda Lingle and various state lawmakers, was provided to the Star-Bulletin.

In September, Hawaii implemented the nation's only wholesale gas cap, which was designed to have Hawaii prices track closer to mainland trends. The law was a reaction to complaints that Hawaii gas prices would rise along with mainland prices but did not follow suit when national prices fell.

The PUC study looked at price data from Jan. 20, 2003, through Jan. 29, 2006, to determine the impact of the price controls.

"It appears that if (price caps) had been in place during the pre-cap period, the Hawaii retail gasoline prices would have been more volatile than they actually were during that period," PUC Chairman Carlito Caliboso wrote in a summary of the report.

The study found that had the gas cap been in place from January 2003 through Sept. 1, 2005, it would have added about a nickel per gallon on Oahu.

But per-gallon prices on Kauai would have been about 2 cents cheaper, and costs on most of Maui and Molokai would have been about a penny less, the study found. Big Island residents would have paid about 1.5 cents more.

Senate Consumer Protection Chairman Ron Menor, chief author of the price cap law, disputed the methodology of the report and noted that the analysis conflicts with that of the PUC's own consultant hired to help implement the law.

ICF Consulting had determined that if the law had been in effect from 1999-2004, prices could have been about 10 to 13 cents a gallon lower.

The PUC's implementation of the law has come under scrutiny by lawmakers, who say the agency has not done enough to enforce the law as they intended to help consumers. PUC officials have said they implemented the law according to its written intent.

"If the PUC had devoted the same kind of effort that it has given to doing this so-called analysis into improving our pricing law ... then consumers would be realizing even greater savings," said Menor (D, Mililani).

GAS CAP COMPARISONS

A look at how Hawaii gasoline prices compared with national averages before and after the implementation of the gas cap:

» Oahu: 36 cents higher before, 41 cents higher after

» Kauai: 60 cents, 57 cents

» Maui (not including Hana): 70 cents, 70 cents

» Molokai: 81 cents, 82 cents

» Hilo: 46 cents, 47 cents

» Kona: 64 cents, 64 cents

Source: Public Utilities Commission

The PUC study looked at historic price data from the Oil Price Information Service to calculate the hypothetical weekly wholesale price caps during the pre-cap period. It acknowledges some assumptions were made to arrive at its findings.

Tim Hamilton, a mainland analyst who has studied Hawaii's market with Menor, criticized the PUC for assuming that wholesalers would charge up to the maximum of the cap. In testimony before lawmakers, officials have said wholesalers charged "at or below the cap" since it began.

"It's all subject to opinion and speculation," Hamilton said.

State Rep. Kirk Caldwell, among the House members leading the push to repeal the law, said the PUC report confirmed some of his beliefs about how the cap has been working so far.

"It hasn't resulted in a savings," said Caldwell (D, Manoa). "It gives me more confidence that there's a better way to do it -- and that's suspending the cap, looking at transparency and looking at some of the other measures we're pushing forth, and let's see what that does."

Meanwhile, the price caps are going up 8 cents next week.

The new price caps, published yesterday by the PUC, could push the statewide average to about $2.99 a gallon. The increase continues an upward trend that has seen the price ceilings go up 31 cents already this month.